ACIT, Villupuram V. S.Radhakrishnan, Tindivanam

ITA 1994/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7734 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 09-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2014
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' ! # . $ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 1994/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME-TAX, VILLUPURAM CIRCLE, VILLUPURAM 605 602. APPELLANT) V. SHRI S. RADHAKRISHNAN, NO.33/3A-1, MALLAM ROAD, INDIRA NAGAR, TINDIVANAM 604 002. PAN AIDPR4858G RESPONDENT) / APPELLANT BY : SHRI SASIKUMAR, JCIT / RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE ! / DATE OF HEARING : 09.02.2016 '# ! / DATE OF PRONOUNCEMENT: 18.03.2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 2 8.3.2014 FOR THE ASSESSMENT YEAR 2010-11. - - ITA 1994/14 2 2. THERE IS A DELAY OF 32 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE REVENUE HAS FILED A CONDONATION PETI TION EXPLAINING THE REASONS FOR THE DELAY. AFTER GOING THROUGH THE AFFIDAVIT, WE ARE OF THE OPINION THAT THERE IS GOOD AND SUFFICIENT REASON FOR FILING THE APPEAL BELATEDLY BEFORE THIS TRIBUNAL. ACCORDINGLY, THE DELAY IS CONDONED IN FILING THE AP PEAL AND THE APPEAL IS ADMITTED FOR ADJUDICATION. 3. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN DE LETING THE ADDITION MADE U/S.40(A)(IA) OF THE ACT IN RESPECT O F PAYMENT TO TRANSPORT CONTRACTORS TOWARDS LORRY HIRE CHARGES. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF TRANSPORTATION OF CEMENT, COAL, GYP SUM ETC. FROM ONE PLACE TO ANOTHER FOR M/S. MADRAS CEMENTS LTD. HE HAD ENGAGED TRUCKS BELONGING TO VARIOUS TRANSPORT OPERA TORS FOR THIS PURPOSE. EACH NOTE WAS SIGNED BY THE DRIVER OF TH E VEHICLE AND AN EMPLOYEE OF THE ASSESSEE. THE ASSESSEE ENGAGED VARIOUS TRUCKS THROUGH ONE SHRI S.V.RAMAN, WHO USED TO MAKE PAYMENTS TO THE EMPLOYEES OF THE ASSESSEE IN CHENNA I, WHO IN TURN MAKE PAYMENTS TO TRUCK DRIVERS LATER. ALL THE PAYMENTS - - ITA 1994/14 3 MADE BY SHRI S.V.RAMAN WERE REIMBURSED BY THE ASSES SEE AND THE PAYMENTS MADE TO SHRI S.V.RAMAN WAS NOT SUBJECT TO TDS. HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINION T HAT BOTH THE ASSEESSEE AND SHRI RAMAN ARE DOING TRANSPORT CONTRA CT BUSINESS AND THE PAYMENTS ARE MADE TO SRI S.V.RAMAN , TRANSPORT CONTRACTOR BY CASH AND CHEQUES. HENCE, A CCORDING TO THE AO, THE PROVISIONS OF SEC.194C OF THE ACT ARE A PPLICABLE TO THE CASE OF THE ASSESSEE AND HE INVOKED THE PROVISI ONS OF SEC.40(A)(IA) OF THE ACT AND DISALLOWED THE CLAIM O F EXPENSES OF ` 48,54,160/-. OUT OF TOTAL PAYMENT OF ` 99,50,994/-. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(AP PEALS). 5. ON APPEAL, THE CIT(APPEALS) HAS GONE THROUGH THE WORK ORDERS BETWEEN THE ASSESSEE AND MADRAS CEMENT WHICH WAS PRODUCED FOR THE FIRST TIME BEFORE THE CIT(APPEALS) . HENCE, THE CIT(APPEALS) CALLED FOR REMAND REPORT AS PER RULE 4 6 A OF THE I.T.RULES FROM THE A.O. AFTER RECEIVING THE REMAND REPORT OF THE A.O. DATED 28.2.2014, HE CALLED FOR COMMENTS FROM T HE ASSESSEE. THE CIT(APPEALS) HAS GONE THROUGH THE ST ATEMENT GIVEN BY SHRI S.V.RAMAN, DATED 28.2.2014, WHICH WAS FURNISHED BEFORE THE A.O. , WHICH READS AS FOLLOWS : - - ITA 1994/14 4 ANS. SHRI RADHKRISHNAN, TINDIVANAM IS DOING TRANSP ORT BUSINESS. HE IS A FRIEND OF MINE. SHRI RADHKRISHN AN HIRES LORRIES FROM VARIOUS PERSONS IN CHENNAI HARBO UR FOR TRANSPORTATION OF COAL FROM CHENNAI TO ALATHIYUR, PENNADAM. FOR MAKING PAYMENTS TO THE LORRY DRIVERS , THE EMPLOYEES OF SHRI RADHAKRISHNAN USED TO TAKE MONEY FROM ME AND PAY TO THEM. I USED TO SEND THE LIST OF EXPENSES INCURRED FOR PAYMENTS MADE TO SHRI RADHAKRISHNANS EMPLOYEES AND SHRI RADHAKRISHNAN IN TURN USED TO DEPOSIT MONEY INTO MY BANK ACCOUNT TOWARDS THE REIMBURSEMENT OF EXPENSES. I HAVE NOT RECEIVED ANY COMMISSION OR ANY OTHER AMOUNT FROM SH RI RADHAKRISHNAN FOR HAVING DONE SERVICES TO HIM. HOWEVER, IN RESPECT OF THE LORRIES PLIED BY ME FOR SHRI RADHAKRISHNAN, I HAVE COLLECTED LORRY FREIGHTS FROM HIM. I HAVE NOT DONE ANY SUB-CONTRACT WITH SHRI RADHAKRISH NAN AND I HAVE NOT GOT ANY BENEFIT FROM HIM. AFTER CONSIDERING THE REPLY GIVEN BY SHRI S.V.RAMAN , THE CIT(APPEALS) OBSERVED THAT THERE WAS NO SUB-CONTRAC T BETWEEN THE ASSESSEE AND SHRI S.V.RAMAN AND THE ASSESSEES EMPLOYEES COLLECTED HIRE CHARGES TO BE PAYABLE TO T HE TRUCK DRIVERS FROM SHRI S.V.RAMAN AND THEREAFTER THAT AMO UNT WAS REIMBURSED BY THE ASSESSEE TO SHRI S.V.RAMAN. FURT HER, AS PER THE TERMS AND CONDITIONS OF CONTRACT ENTERED INTO B Y THE ASSESSEE AND MADRAS CEMENT, THE ASSEESSEE PREVENTED FROM SUB-CONTRACT TO A THIRD PERSON AND THE ASSESSEE IS RESPONSIBLE FOR THE WORK ENTRUSTED TO IT. ACTUALLY, THERE WAS NO MATERIAL TO SUGGEST THAT THERE WAS ANY CONTRACT OR SUB-CONTRACT WITH TRUCK - - ITA 1994/14 5 OWNERS, WHEREBY THE RISK AND RESPONSIBILITY, WHICH IS ASSOCIATED WITH THE CONTRACT HAS ALSO BEEN PASSED ON TO THESE OUTSIDERS. ACCORDINGLY, HE PLACED RELIANCE ON THE DECISIONS OF THE TRIBUNAL, MUMBAI BENCH IN THE CASES OF BHAIL BULK CARRIERS RE PORTED IN 50 SOT 26, S.S.WARAD (BANGALORE BENCH) 26 ITR (TRIB) 3 58 AND BHORUKA ROADLINES LTD., MUMBAI BENCH, 117 ITD 311 A ND ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT THE PROVISIONS OF SEC.194C ARE NOT APPLICABLE TO THE AS SESSEE. ACCORDINGLY HE ALLOWED THE CLAIM OF THE ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. FIRST OF ALL, THIS ISSUE IS SQUARELY C OVERED BY THE DECISION OF THE TRIBUNAL, MADRAS BENCH IN THE CASE OF SHRI N. PALANIVELU V. ITO [40 ITR (TRIB) 325] WHEREIN IT W AS HELD AS UNDER: 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ACIT (2012) 136 ITD 23 (VISAKHAPATNAM) AND JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICE S (P) LTD IN ITA NO.122 OF 2013 DATED 09.7.2013 HELD THAT SEC 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE - - ITA 1994/14 6 PAYMENT. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSI NG OFFICER WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. 4. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED M OUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSMENT YEAR IN RESPECT OF THE EXPENSES EITHER A S OUTSTANDING EXPENSES OR AS SUNDRY CREDITORS, THIS AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTE D BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATI ON. 6.1 EVEN OTHERWISE, IN OUR OPINION, PROVISIONS OF SEC.194C(6) OF THE ACT ARE APPLICABLE IN THE FACTS OF THE PRESENT CASE, WHICH READS AS UNDER : 194C(6) : NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PA ID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT ACCOUNTANT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. IT IS TO BE NOTED THAT THE ASSESSEE HAS FILED FORM NO.15J DATED 3.1.2014 BEFORE THE CIT(APPEALS), PONDICHERRY , THE PROVISIONS OF SEC.194C(6) ARE APPLICABLE IN VIEW OF THE - - ITA 1994/14 7 JUDGMENT OF THE TRIBUNAL IN THE CASE OF ASSOCIATED ROADWAYS PVT. LTD. (HYDERABAD), 25 ITR (TRIB) 713. 5.2 BEFORE US, THE LD. DR STRONGLY RELIED ON THE FO LLOWING JUDGMENTS: 1. CIT V. SIKANDARKHAN N. YUNVAR (33 TAXMANN.COM 1 33) (GUJ) 2. CIT V. CRESCENT EXPORT SYNDICATE(33 TAXMANN.COM 250 (CAL.) 6. WE ARE NOT GOING INTO THESE JUDGMENTS IN VIEW OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF VECT OR SHIPPING SERVICES (P) LTD. (TS-401-SC-2014) , WHEREIN THE APEX COURT HAS DISMISSED THE REVENUES SLP AGAINST ALLAHABAD HC RU LING IN VECTOR SHIPPING SERVICES (P) LTD. ACCORDINGLY, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON FRIDAY, THE 18 TH OF MARCH, 2016 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 18 TH MARCH, 2016. MPO* - - ITA 1994/14 8 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.